CCEA clears $1 bn VC funding in realty
The Cabinet Committee on Economic Affairs (CCEA) has approved two real estate venture capital funds which will raise about $1 billion from foreign investors.
By TNN |
NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) has approved two real estate venture capital funds which will raise about $1 billion from foreign investors.
Both the funds — Urban Infrastructure Opportunities Fund (UIOF) and Peninsula Realty Fund — have already obtained approval from the Foreign Investment Promotion Board (FIPB) to invest in townships, roads, ports and power. Since the proposed FDI in these funds exceeds Rs 600 crore, they were referred to the CCEA.
While Peninsula Realty proposes to bring in $350m, which is approximately Rs 1,596 crore, UIOF is likely to pump in $450m, which translates to Rs 2,300 crore. UIOF has a green-shoe option of Rs 460 crore, which will take the total inflow to Rs 2,484 crore. Both the proposals were supported by the ministry of urban development.
The proposals attract Press Note 2 of ’05, according to which the capital will have a lock-in period of three years after the completion of minimum capitalisation. As per the FDI rules laid down in PN 2, these projects will have to be completed in five years from the date of obtaining statutory clearances.
Even though funds cannot be repatriated before three years, they have an option of going to the FIPB again for any such move. The CCEA also cleared a proposal by international hotel chain Hilton International to enter into a joint venture with DLF.
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Hilton will hold 26% stake in the proposed JV and will invest Rs 643 crore or $143 million. It has also got the go-ahead for setting up a wholly-owned subsidiary with an investment of Rs 130 crore for the operation and management of hotel business in India. The FIPB had cleared the proposal after putting it on hold initially since the foreign investor did not have a no objection certificate (NOC) from its JV partner, Oberoi Group, with which it has a marketing agreement.
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